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Equity versus Equality

Author

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  • Konow, James
  • Saijo, Tatsuyoshi
  • Akai, Kenju

Abstract

How should economic output be distributed among those who created it? An expansive theoretical and empirical literature seeks to answer this fundamental, and controversial, question, which has implications, inter alia, for the structure of wages, redistributive policies and international agreements. Among the possible fairness rules that have been proposed, the primary rivals are equality and equity, whereby the latter refers to allocating in proportion to some measure of individual contributions. This paper reports the results of an experiment conducted in the United States and Japan. It investigates a large variety of factors that might affect preferences for equity and equality, including multiple approaches to examining concepts of culture. We find impersonal third parties, or spectators, exclusively favour equity. Distributive preferences move incrementally toward equality, however, when subjects share personal stakes (i.e., are stakeholders), and even further toward equality, when stakeholder anonymity is lifted. Although the degree of self-interest sometimes differs across countries, these findings about fairness preferences are robust with respect to a wide range of non-ethics variables that seldom matter, including race, income, gender, nationality and culture. We interpret the findings as suggesting that equity is an impersonal (or impartial) rule of fairness, whereas fairness preferences move progressively toward equality with greater proximity, i.e., as relationships become more personal through belonging to a group and being non-anonymous.

Suggested Citation

  • Konow, James & Saijo, Tatsuyoshi & Akai, Kenju, 2016. "Equity versus Equality," MPRA Paper 75376, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:75376
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    2. Stefania Bortolotti & Ivan Soraperra & Matthias Sutter & Claudia Zoller, 2017. "Too Lucky to be True - Fairness Views under the Shadow of Cheating," CESifo Working Paper Series 6563, CESifo.
    3. Christine L. Exley & Judd B. Kessler, 2018. "Equity Concerns are Narrowly Framed," NBER Working Papers 25326, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    fairness; equity; equality; experiments;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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